3 Simple Rules for How to Effectively Communicate Your Institution’s BudgetPosted on Jun 2, 2017 10:14:59 AM
As expectations and challenges continue to rise in the finance office, it is now more than ever, necessary to understand how to effectively communicate your institution’s financial plan to stakeholders. The ability to create, maintain, and communicate consensus around your organization’s budget is critical to provide stakeholders the confidence and knowledge needed to move forward with your financial and strategic plans. However, the challenge then becomes, how to balance the different levels of fiscal knowledge of your audience while executing a high level of transparency?
Rule 1 – Focus on how the budget supports the organization’s mission and goals
It is equally important to present your budget by focusing on the actual numbers and how they support your organization’s mission and goals. Link finances with your mission; be it managing strategic and operations planning, expanding student services, or evaluating program performance. Discuss significant changes and trends as opposed to just reciting various budget data points. Questions to ask include: (1) Are new resources being directed to areas that best support the institution’s mission? (2) Are resources being redeployed to meet the demands of the stakeholders? The demand for efficient use of resources is continuing to rise. Sharing your financial situation, whether positive or negative, will improve the transparency and value of your organization.
Rule 2 – Discuss the variables that impact your budget
Working in the finance office, you are challenged to juggle powerful conflicting interests while prioritizing available use of tax dollars, often neglecting one initiative to support another. This challenge will continue as we transition into a more integrated global economic power with fewer independent resources, more international competition and less clout than in previous decades. Your audience needs to understand the nature of the budget. The quality of budgeting is not as simple as comparing various data point areas, but rather how the budget is being monitored throughout the years. By explaining these short and long term unpredictable variables, you can better communicate the future financial health of your institution.
Rule 3 – Focus on transparency
Stakeholders expect greater levels of transparency, for all financial and strategic plans. As you look to present your budget, you should incorporate updated long-range financial projections into your comprehensive summary. Institution officials must look at the future financial position of the institution, not just the current trend of the budget. This can be supported by embracing and developing three dimensions of administration – strategic planning, operational planning and internal improvement. An increase in major revenue sources such as tuition and fees, should not come as a surprise to those members who have been actively engaged in your discussions about the institution’s financial situation. Supplementing these discussions with visual analytic reports will help the audience gain a deeper understanding of the story you are trying to convey.
Communicating your institution’s budget is necessary at every level of the organization. Not only does it provide clarity on the financial health of the institution, but it gives your stakeholders the confidence needed to take action that will positively impact your students over the long run. As you are building out your next budget presentation, take the opportunity to incorporate these three simple rules to satisfy this demand and demonstrate your skills.
Thomas M. Ridout is a Senior Analytics Advisor for the community college market with Forecast5 Analytics. He is the former Executive Director of Finance for Northeast Iowa Community College (NICC) in Calmar, Iowa. Thomas was employed with NICC for 41 years, also serving as an Accountant and Business Manager. Prior to NICC, he was employed with Dee Gosling and Co. CPA’s in Waukon, Iowa. He graduated from Northeast Iowa Community College with an Accounting degree. He is also a member of the Northeast Iowa Community College Alumni Hall of Fame.